The Morning Call
11/16/20
The
Market
Technical
On Friday, the S&P challenged its
all-time high of the second time in the week.
Whether one looks at this pin action as the third and fourth attempt to
push through that boundary or that the entire week was all part of the same
challenge really doesn’t matter. The
bottom line is that the index is now challenging its all-time high and we must
await its success or failure. If the
latter, the S&P will still remain in a trading range which must be resolved
before we can have directional confidence.
The chart of the long bond is roughly
the reverse of the S&P’s. It has
made a triple top and established a three month downtrend and resetting its 100
and 200 DMA’s to resistance in the process.
However, it failed to successfully challenge the lower boundary of its
very short term uptrend. A second
attempt seems likely; and if that proves successful, the next support level is
considerably lower (interest rates higher).
The dollar’s chart mimics the long bond’s. UUP made a March high, established a five
month down trend, in the process reset its 100 and 200 DMA’s to resistance and
has bounced off the lower boundary of its short term trading range twice. We await either another challenge of the
lower boundary of its short term trading range or the upper boundary of its
very short term trading range.
Gold remains in a three month trading
range. On the positive side, it tested
the lower boundary of that trading range and bounced. Plus, it has that huge gap down open that
needs to be filled although it still must successfully challenge its 100 DMA to
accomplish that. Further, even if it is
successful, it must push through its all-time high (horizontal black line at
top of chart), to regain upward momentum.
Net, net, short term directional uncertainty is the name of the game for
GLD.
Bottom line.
All these indicators are in trading ranges and are also near a challenge
of one of the boundaries of those trading ranges. Clearly, one way or the other, they will all
break one of their boundaries, resetting directional moves. My guess is that they will do so roughly simultaneously
which will likely reflect a new accepted economic scenario.
Fundamental
Headlines
The
Economy
Review of last week
The economic
data last week was neutral with no primary indicators reported. So, the stats continue to discount any notion
of a ‘V’ shaped recovery. Unfortunately,
the odds of a stimulus bill anytime soon are fading and the probabilities of another
lockdown are increasing, which makes a ‘V’ recovery even more unlikely.
Overseas, the
indicators were negative, maintaining the erratic course of the global economy. And with renewed lockdowns occurring across
Europe, there does not seem much hope of improvement. Not helpful to our own recovery.
https://www.zerohedge.com/markets/global-economy-rolling-over-lockdowns-return
Whatever the
shape or magnitude of the near term bounce back, I am not altering my belief
that long term the economy will grow at a historically subpar secular rate due
to the twin burdens of egregiously irresponsible fiscal and monetary policies---which,
by the way, are becoming even more egregiously irresponsible as a result of
measures being taken by the government and the Fed in dealing with the current
crisis.
America’s unending
spending frenzy.
https://www.washingtontimes.com/news/2020/nov/12/americas-unending-spending-frenzy/
The Fed has a commitment
problem.
https://www.aier.org/article/the-fed-has-a-commitment-problem/
US
The November NY
Fed manufacturing index was reported aet 6.3 versus projections of 12.75.
International
September Japanese
industrial production was up 3.9% versus estimates of up 4.0%; Q3 preliminary
GDP growth was 5.0% versus 4.4%, capital expenditures -3.4% versus -3.0%,
personal consumption +4.7% versus +5.1%.
October YoY
Chinese fixed asset investments rose 1.8% versus consensus of +1.6%; industrial
production +6.9% versus +6.5%; retail sales +4.3% versus 4.9%.
Other
The
coronavirus
Moderna vaccine 95% effective at room temperature.
China
The next five year plan.
Bottom
line. Why investors are walking into a trap.
https://www.zerohedge.com/markets/buffett-indicator-why-investors-are-walking-trap
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